This year will bring a "turning point" for cotton prices,
and appears promising for cocoa bulls, but looks less upbeat for coffee and
sugar futures, Macquarie said.

The bank, which will release detailed commodity price forecasts
later this month, said in an initial outlook that the outlook for cocoa prices
was "slightly bullish", thanks to the fall of production behind consumption in
2012-13, after two years of surplus.

"The global market will be in a small deficit, as West African
production falls and grindings recover," Macquarie analyst Kona Haque said.

In fact, Barclays Capital forecasts a deficit of 108,000
tonnes, and Marex Spectron one of 107,000 tonnes, with Rabobank foreseeing an
83,000-tonne shortfall, although Cargill believes output will "more or less"
match consumption.

"Although physical supplies are comfortable right now as the
main crop harvests near completion, port arrivals to date are down 11% year on
year" in Ivory Coast, the top producing country, as of December 30, three
months into the 2012-13 marketing year, Ms Haque said.

"Cocoa fundamentals are more construction than fellow softs."

'Still heavy'

Macquarie's support for cotton was based on the prospect of
farmers switching to other crops, after the poor performance of prices in the
fibre overall last year, when futures fell 18% in New York.

While cotton's fundamentals were "still heavy", weighed by
record world supplies, "2013 should be the turning point for cotton as supply
falls to more manageable levels versus demand".

Indeed, in the US, the top cotton exporting country, "acres
are expected to fall sharply as farmers switch to the more bullish grain/ soy
crops," helping ensure prices "bottom out finally in the second half of 2013".

In fact, cotton futures have already enjoyed some rebound,
rising 9% in the October-to-December quarter, helped by unexpectedly firm US
exports.

At Commonwealth bank of Australia, Luke Mathews said that "cumulative
US cotton sales over the past four weeks are 408% above year ago levels,
supporting the recent firmer tone in global prices".

'Key risk'

However, Macquarie said the outlook for both arabica coffee
and raw sugar futures was "neutral to bearish", and the prospect in both crops
of richer Brazilian supplies.

For sugar, "2012-13 will see another season of significant
surplus", Ms Haque said, if flagging a "key risk" of a change in Brazil's
ethanol policy which, if it encouraged more cane to be turned into biofuel
rather than sugar, would underpin prices of the sweetener.

For arabica coffee, "supplies may still be heavy relative to
demand", despite 2013 being an "off" year in Brazil's cycle of alternate higher
and lower producing years.

However, Ms Haque cautioned investors to "watch out for
moisture levels in Brazil's main coffee regions, which have started to get dry".

The main coffee-producing state of Minas Gerais in eastern
Brazil is one of the areas, also including Bahia, suffering a lack of rainfall.